Don't give exempt income a miss in ITR

REPORT IT IN SCHEDULE EI OF ITR 3 & ITR 4

- SAIKAT NEOGI

IT IS IMPORTANT to report all exempt income in the Income Tax Return (ITR) even though it is not taxable. It will ensure complete disclosure of the taxpayer's financial profile and prevent any mismatch with information available to the income tax department.

There are more than 50 categories of exempt income, each of which come under different sections of the Income-Tax Act, based on the nature of income, residential status or other specified conditions. For instance, agricultural income is exempt under Section 10(1), interest on tax-free bonds under Section 10(15), gifts received from specified relatives under Section 56(2), interest amount of ₹10,000 in savings bank account under Section 80TTA, life insurance proceeds including bonus under Section 10(10D) subject to prescribed conditions.

Each category has its own limits and conditions—for example, gifts above ₹50,000 from non-relatives are taxable. Filing exempt income in the ITR will enable the Income Tax Department to match data from Annual Information Statement (AIS), Form 26AS, and other third-party reports.